Welsh Government: devolve corporation tax to Wales as well as Northern Ireland.

Next Tuesday in the Assembly, the First Minister will set out what his government’s stance will be on which financial powers should be transferred to Wales. We’ll have to wait for the full detail, but it’s now clear that in one significant area – corporation tax –  Carwyn Jones has shifted position.

In today’s Belfast Telegraph, a report on the impassioned debate in Northern Ireland on devolving corporation tax powers to Stormont compares the positions of the other devolved governments including Wales:

A Welsh Government spokesman said: “We are aware that the UK Government is considering devolving powers over corporation tax to Northern Ireland.

“If the UK Government does propose to devolve corporation tax powers to one or more of the devolved administrations, it should make a similar offer to Wales.”

The Welsh Government has confirmed the statement which, although hedged around with caveats, represents a significant development and a change in position by the First Minister who has, until now, resisted opposition calls to demand corporation tax be devolved.

Back in March, before the referendum on further powers he told the BBC,

In order for tax-varying powers to be devolved, particularly income and corporation tax, there would need to be a referendum – no question about that in my mind.

And last week the Western Mail reported how he expressed his concerns to members of the CBI:

Turning to tax, Mr Jones the devolution of corporation tax was “superficially attractive”.

But he added: “We shouldn’t forget the fact that if corporation tax were to be devolved and reduced, there’s a consequential hit on public finances.

“The worry I have is that if England, Scotland, Wales and Northern Ireland can set their own rates, we will then find ourselves in a competitive spiral to the bottom, which will be fine for businesses but not so good for public finances.”

No doubt he would argue that it’s not he that’s changed position but the UK government which is considering changing its position and that his government is simply dealing with a new reality.

And underlining the First Minister’s continued suspicion of the move,  on tonight’s Sharp End Labour AM Keith Davies told me,

We’ve discussed it as a group and one of the issues Carwyn put forward was that if Northern Ireland get it they’ll be competing with southern Ireland and it’ll cost Northern Ireland a large sum of money.

Me: In that case then Wales should have that power?

KD: No because what Carwyn was saying was that it’ll cost Northern Ireland a lot of money and they’ll lose out on it.

But when I published some of this information on Twitter earlier, Plaid tweeters seized on it as evidence of a u-turn and the party has tonight put out this statement:

Plaid Cymru has welcomed the Welsh government’s u-turn on corporation tax and has called on Carwyn Jones to be proactive in making the case for Wales to take responsibility for these powers.  Ieuan Wyn Jones AM, Plaid Cymru’s Finance spokesperson, said it was positive that the argument Plaid had been making for years had brought about a change of position in the government.

UPDATE 17/06/11 16.40

I’ve now had a further statement from a Welsh Government spokesperson :

We are not actively seeking powers to devolve corporation tax. However, if the UK Government is planning to give CT varying powers to one of the devolved administrations, then we would expect this offer to be extended to Wales also.

It has to be said that reducing the rate of CT would leave a large hole in Welsh finances, at a time when a financial squeeze is being imposed by the UK Government.

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Sharp End 17/03/11

For tonight’s Sharp End, I’ve interviewed the Shadow Welsh Secretary Peter Hain about Labour’s Assembly election hopes.

First though I wanted to know about his relationship with the First Minister, Carwyn Jones.

You may remember from last week the behind-the-scenes row over Mr Hain’s criticism of the Deputy First Minister, Plaid Cymru’s Ieuan Wyn Jones.

Last week Carwyn Jones’ response seemed to suggest a sharp difference of opinion between he and Mr Hain.

Since then though both sides have done their best to pour oil on troubled waters, issuing a joint statement and holding back from any overt criticism of Plaid ministers in Mr Jones’ government.

And in my interview, Peter Hain denies intending to undermine Carwyn Jones, telling me that ‘this is a Cardiff Bay bubble story’ before adding that he supported Carwyn Jones in his leadership bid and that ‘we remain good friends.’

What Mr Hain really wanted to talk about what his belief that Labour has the best opportunity for forming a majority government that it’s had since the Assembly was created.

His reason for saying that? The fact that this will be the first Assembly election without a Labour government in Westminster.

I wondered if that ran the risk of making Labour’s campaign for May the 5th entirely negative – not according to Peter Hain who reckons it can do both things: channel opposition to the UK Government whilst building on Labour’s record here.

Is he right about that? That’s what I’ll be discussing with my guests who are the Liberal Democrat AM Veronica German, Plaid Cymru’s Neil McEvoy and the former council leader Jeff Jones.

They all have experience of local government so we’ll be talking about this week’s dramatic intervention on Anglesey: was it the right thing to do?

And I’ll be speaking to the man behind the Welsh Conservatives’ manifesto, David Melding AM, to find out how his party plans to fight the Assembly election campaign.

Join me for Sharp End, tonight at 1035pm, ITV1 Wales.

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Calman style

There was much talk at the Welsh Liberal Democrat conference and the Conservative Spring Forum at the weekend about the ‘Calman-style process’ that the UK coalition government promised would follow a Yes vote in the powers referendum.

Now that there’s been a Yes vote, leading Westminster politicians including Nick Clegg, David Cameron and Cheryl Gillan, lined up to say that promise would be kept.

There’s very little by way of detail, but I’ll tell you what I can.

The Calman commission was set up by MSPs to look at ways of ‘improving’ the Scottish parliament’s ‘financial accountability.’ It was seen by many as a way of wrong-footing the Scottish National Party government which didn’t support the commission.

It’s not clear whether or not what will happen for Wales will be a commission or some other form of review.

The First Minister Carwyn Jones told AMs he hoped it wouldn’t be a commission because he believed the Holtham commission on funding and finance for Wales, which published reports in 2009 and 2010, has already done most of the legwork on funding.

He said he’d ‘urge the UK Government to look at Holtham as THE commission.’

The Wales Office won’t commit itself one way or another, apart from noting that a lot of evidence has already been gathered and it doesn’t want to duplicate that evidence.

What about a figurehead like Calman or Holtham to lead whatever form of inquiry or review is carried out? Names have been discussed I’m told but no decision has been made.

What about terms of reference? Too early to say – no decision has been made.

On timing I can be a little more clear. I’m told the Wales Office won’t do anything until after the Assembly election on May 5th.

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Labour’s coalition split

It’s a war of words that gets to the heart of the way the two parties which form the One Wales coalition government distinguish themselves after four years of working together.

I’m told there’s real anger and very red faces amongst Labour leaders in Cardiff Bay and some backbench AMs in Cardiff Bay following Peter Hain’s latest intervention.

It started when the Shadow Welsh Secretary responded to comments made by the Deputy First Minister, Ieuan Wyn Jones, about the future of the Wales Office. The Plaid Cymru leader said there should be ‘a mature debate’ about it.

Mr Hain issued a statement saying,

Ieuan Wyn Jones wants a discussion that goes wider than the future of the Wales Office.

I think we need to have a mature debate about the future role of the Welsh Deputy First Minister.

Can you really justify having a Deputy First Minister in an Assembly Cabinet of only nine?

It is difficult, I think, in the long-term to justify having a Deputy First Minister in the Welsh Assembly Government as ineffective as Ieuan Wyn Jones.”

I put those remarks to the Deputy First Minister who brushed them aside saying

Well I don’t think I want to respond to any personal comments like that. I think it is totally inappropriate for me to do so.

But it was the bald statement that the First Minister and leader of Welsh Labour, Carwyn Jones,made immediately afterwards that was most interesting. He said,

I don’t have any ineffective ministers in my Government.

You can’t get much clearer a response than that.  ‘A very public slapdown’ to Peter Hain’ as the Conservative leader Nick Bourne put it later.

But there was more. Carwyn Jones asserted his authority saying,

I am the leader of the Welsh Labour party. It’s my role to speak on behalf of the party.

And it didn’t end there. A Labour party source pointedly told me that Ed Miliband is the UK party leader and Carwyn Jones speaks on matters devolved to Wales before adding,

The future of the Wales office is not a devolved matter.

Some Plaid sources and other commentators have called this a power struggle within Welsh Labour and in one sense it is.

But it’s not a struggle for the top job; rather it’s a fight over the way Labour and Plaid emphasise the difference between themselves ahead of May’s Assembly election.

There are those within Labour who think that, while the One Wales coalition was a necessity, that the relationship between the two parties in Cardiff Bay has become too cosy.

Speaking at their joint press briefing today, Carwyn Jones and Ieuan Wyn Jones both emphasised that they want an orderly separation before May 5th and to avoid personal attacks.

As one Labour backbencher put it to me today, interventions like this don’t help.

It’s connected to another division within Labour that I mentioned in an earlier post at the time of the party’s Llandudno conference and that’s what is considered to be the minimum number of AMs Labour needs after May to avoid going into coalition again.

There’s a strong view amongst some Welsh Labour members that the party should certainly go it alone if it wins 31 seats, but should seriously consider forming a minority government with 30, 29 or even 28 seats.

In my earlier post, I quoted one party figure as saying

Nobody said government should be easy.

But around the Bay I’ve heard said repeatedly – and I’ve heard it again today – that 31 is too few to form a stable majority government.

A backbencher told me today they remembered with horror the last time Labour governed alone with 30 AMs:

You can’t be ill, ministers can’t go on visits, there’s no slack.

A minister told me that a coalition with 31 seats would be ‘a hard sell’ to the party but there’s no doubt there’s a significant number within Labour who’d prefer a large majority coalition, One Wales II in other words.

But there’s just as significant a number who want that to be the very last resort.

There’s a clear difference here and it’s not – in public at least – between the two parties.

As one Plaid source said to me, ‘it’s ironic: everyone was thinking there’d be increasing strains within the coalition. It seems the strains are appearing elsewhere.’

 

UPDATE 16:55 Carwyn Jones and Peter Hain have now issued a joint statement setting out what they CAN agree on.  Here it is:

The blunt truth is that although there are four parties in Welsh politics, there are only two futures for Wales. A country that is fair and equal with Labour, or a Wales that faces death by a thousand Conservative and Lib Dem cuts.

People in Wales understand that this is the real choice in this election. They want to hear about our plans to provide jobs for young people, to protect policing in Wales from Tory cuts and to improve the NHS. This is what we are focusing on and will continue to focus on until May 5th.

We are committed to protection of Welsh representation in both Government and Parliament at Westminster. Especially at a time when Wales is under greater attack than ever before this is vital.

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Unhappy reading for Liberal Democrats

This weekend has seen yet another series of pronouncements from journalists and politicians on the future of the Liberal Democrats as an independent party. Here’s a round-up:

Labour leader Ed Miliband is appealing to disaffected Lib Dem supporters, an appeal that follows one earlier this week by the First Minister Carwyn Jones , urging Lib Dems to ‘come home’ to Labour. And the week before, unveiling a Welsh Lib Dem councillor who was defecting to Labour, Shadow Welsh Secretary Peter Hain said there was ‘an open door’ to party members who felt betrayed by their party leaders.

In this week’s Spectator, James Forsyth reckons that UK politics is returning to a two-party model, arguing that the very construction of the House of Commons chamber makes it almost inevitable. In the same magazine Nick Cohen claims that ‘the two-party system is beginning to reassert itself.’

Forsyth’s prediction goes something like this. The party’s right-wing, sometimes known as Orange-Bookers,  are ‘the political descendants of the Peelites’ and no longer hostile to David Cameron’s socially liberal Conservative party. Forsyth says it’s easy to see these ‘modern-day Peelites’ returning to the Tory fold.

Social Democrat Lib Dems, Forsyth claims, will head back to the Labour party, like the Welsh defector John Warman I mentioned earlier. It might also mean something that there are reports that the former SDP leader David Owen has been in contact with Ed Miliband.

Meanwhile there was a heated discussion on this morning’s Week in Westminster programme on Radio 4 between Conservative MP Mark Pritchard and the Liberal Democrat MP Chris Davies about allegations that the Conservatives had held back in the Oldham East and Saddleworth by-election to give their coalition partners a better chance of winning.

Mark Pritchard said that he was in favour of such arrangements between the two parties in Westminster by-elections although only for as long as the coalition lasts and not in Welsh Assembly or Scottish Parliament elections.

Chris Davies rejected that out of hand. If Lib Dem leaders even talked about making that sort of agreement, he said, it would ‘split the party.’

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